Morgan Stanley wants you to know the 60/40 portfolio is dead. They've replaced it with something better. Something more sophisticated. Something that requires you to pay Morgan Stanley.
The new income portfolio breaks down like this: a little bit of everything, spread across asset classes you've never heard of, rebalanced quarterly by people who definitely know more than you. Diversification, they call it. You used to get that by owning two ETFs. Now you need seventeen and a wealth manager.
Here's what changed between the old advice and the new advice: nothing. Stocks go up or down. Bonds do the opposite until they don't. Throw in some alternatives because the fee structure on those is chef's kiss. Marketing teams at investment banks have been reinventing this wheel since the Carter administration.
The traditional 60/40 survived the Great Depression, two world wars, stagflation, the dot-com crash, and 2008. But sure, it can't handle 2026. This time is different. Morgan Stanley said so in a client presentation with fourteen slides and a pie chart that looks like a Spirograph.
Retail investors will read this headline and think they're doing it wrong. They'll panic-sell their boring index funds and buy whatever complex income strategy gets pitched to them by a guy named Brett who drives a leased BMW. Brett will collect his commission. The portfolio will underperform. Brett will blame volatility.
The 60/40 didn't stop working. It just stopped generating fees.
Photo by Sven Piper on Unsplash
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